Keep it simple, stupid!

I always strive to explain complicated Social Security rules and policies in as simple a manner as possible. And in doing so, I sometimes gloss over the fine points and intricacies of Social Security law, in order to answer someone's question or to make a point. Today's questions come from people who are essentially asking me to "un-simplify" my answers.

Q: I am getting Social Security disability benefits and have been getting those checks since age 58. I'm now 63. In past columns, you have written that a Social Security disability benefit is the same thing as a full retirement benefit. But I don't get that. Had I been able to work until my full retirement age of 66, in other words, had I not been forced to stop working at age 58 by my disability, wouldn't I be getting a much higher Social Security benefit?

A: Yes, you would be getting a higher (but not really that much higher) benefit had you kept working at your full salary until age 66.

What I am trying to explain when I say that a disability benefit is equal to your full retirement rate is that a disability benefit is not, as many people assume, some kind of reduced Social Security payment. Some people even think of the disability program as a form of welfare that isn't "real Social Security." Many of these folks are confusing the Supplemental Security Income disability program with Social Security disability. As I've explained many times in this column, SSI is a welfare program run by the Social Security Administration. So SSI disability is welfare. But Social Security disability is a real Social Security benefit.

Here is another way I can explain my remarks. You said you started getting disability benefits at age 58. Well, that monthly disability benefit you are receiving is the same amount you would get had 58 been your full retirement age.

In fact, due to the vagaries of Social Security computation formulas, one person's Social Security disability benefit is frequently higher than another person's full retirement benefit. Here is a simple example. Sherry is 30 years old. She had a high-paying job but was in a severe car accident and is now disabled. Her Social Security disability benefit will be fairly substantial, because it is based on only a few years of very high earnings. On the other hand, Fred, who was a factory worker, is 66 years old and retired. His monthly retirement benefit is less than Sherry's monthly disability payment because Fred's Social Security rate is based on 35 years of middle income earnings.

Q: You have been telling your readers that their Social Security retirement benefit is based on their highest 35 years of earnings. But as a retired Social Security Administration employee, I can state unequivocally that you that you are wrong. You should know that retirement benefits are based on a worker's highest 40 years of earnings, and that from that 40 year base, we take out the five lowest years. Those are called the "drop out years," and your readers need to know about that.

A: Gosh, you must have been a technocrat with SSA buried in a cubicle somewhere at the agency's headquarters, right? In other words, you knew Social Security's rules (at least with respect to benefit computations) inside and out. But I bet you never had to explain them to a real live potential retiree, did you?

Had you ever actually talked to someone planning to file for Social Security benefits, you would have learned that telling that person about the 40 year base of earnings, from which five years are "dropped out," simply confuses the issue.

In other words, what is the difference between 40 years minus five; and 35 years? Don't you see that it is just much simpler to tell people that their benefit is based on their highest 35 years of earnings?

Q: In a past column, you told someone that he needed to have worked and paid Social Security taxes in five of the last 10 years in order to qualify for Social Security disability benefits. But that doesn't tell the whole story. He needs to be both fully insured and currently insured. I am an SSA claims representative and I know the law.

A: Well, you may know the law, but you sure don't know how to simply explain the work and earnings requirements for Social Security disability benefits. Do you really think anyone (outside of SSA) knows what "fully insured" and "currently insured" means?

What the rules actually say is that in order for people to qualify for Social Security disability benefits, they must meet a "recent work" test and a "duration of work" test.

For anyone age 31 and older, the recent work test means that he or she must have worked and paid Social Security taxes in five out of the last 10 years. There is a sliding scale of recent work required for people under age 31. The minimum amount of recent work required is one and one half years of work out of the last three years for anyone 24 and younger.

The "duration of work" test is based on a messy mathematical formula. The law says you need one quarter of Social Security covered work for each year between age 22 and the year you became disabled - but never more than 40 quarters. Here is an example. Brian was born in 1960. He became disabled in 2012. Brian was 22 in 1982. So he needs 30 quarters of Social Security work coverage. (2012 minus 1982 equals 30.) Because most people earn four quarters of Social Security coverage for each year they work, that means Brian needs seven and one-half years of Social Security covered work to meet the duration of work requirement for disability benefits.

I hope my readers see why my motto in writing this column is "KISS" - or keep it simple, stupid!